Filargyría virus epidemic

The Filargyría virus can be as hazardous to investment as the coronavirus can be to life. But unlike the latter, the Indians are not known to be particularly immune to the filargyría virus. While the coronavirus targets the respiratory system, this one attacks the limbic system which is located in the temporal lobe of human brain. Other mammals are not known to be as vulnerable to filargyría attack as humans.
Though a plenty of prophylactic and therapeutic measures are available to counter the virus it goes uncontrolled on account of the difficulty to diagnose it. The patient feels no symptoms of the viral attack till it is too late.
You might be wondering what this new virus is for you might have missed the news reports about it in the print media and television. So let me draw your attention to them. On Jan 2 2020 a local news channel reported, “Around 70 depositors of Visionaries Urban Co-Operative Credit Society have filed a complaint with the economic offences cell (EOC) to try and get their money back. They have requested EOC that the money which has been stuck in the bank should be recovered. People having accounts in branches Majorda, Loutulim and Colva are facing this problem. The Registrar of Urban Societies have appointed an administrator for the society and the ECO is already investigating the matter.”
Earlier on November 29 2019 a local daily had reported, “Goa Women’s Forum has submitted a letter to the Minister for Cooperation and Consumer Affairs, Govind Gaude highlighting the need to focus on women consumer and financial literacy awareness programmes. In the letter, GWF pointed out that it has been receiving many consumer complaints from women with regards co-operative societies not returning their matured fixed deposits as they do not have sufficient funds to pay the same. GWF particularly pointed out the most recent case of matured fixed deposits not being returned by Visionaries Urban Co-operative Credit Society Ltd.”
Around the same time national media had reported “Urban cooperative banks (UCBs) have reported nearly 1,000 cases of fraud worth more than Rs 220 crore in the last five fiscals, according to the Reserve Bank of India (RBI).
Responding to an RTI query, the central bank said a total of 181 fraud cases involving Rs 127.7 crore were noticed during 2018-19. A total of 99 and 27 such cases involving Rs 46.9 crore and Rs 9.3 crore were reported during 2017-18 and 2016-16 respectively, it said. As many as 187 cases of fraud involving Rs 17.3 crore were reported in 2015-16 as against 478 such cases involving Rs 19.8 crore during 2014-15.
The RBI said, ‘The cases of frauds assume significance as the Punjab and Maharashtra Co-operative (PMC) bank has been under the RBI’s restrictions since September 23 after the central bank had found financial irregularities, including huge under-reporting of loans and non-performing assets to real estate developer HDIL to the tune of Rs 6,500 crore, against its entire assets of Rs 8,880 crore, using hundreds of dummy accounts.”
It’s nothing about cooperative banks. It is not even about the banks fixed deposits or investments. It is all about the Filargyría virus. Filargyría in Greek means greed. It’s simple if you have two investment options, one yielding seven per cent and the other eight per cent which would you choose? There is nothing wrong in trying to maximize one’s gain. But it is stupid to do it without looking at the risk in those options.
Coming to the specific case of bank fixed deposits, why does one bank offer eight per cent when the other bank offers seven per cent? No bank is into philanthropy. It’s ultimate goal is profit. If it can borrow at seven per cent and lend at 14 per cent why will it ever offer eight per cent interest to its depositors?
That it is offering 8 per cent is ample proof that it cannot borrow at 7 per cent. Nobody is ready to lend to it at 7 per cent given its risk profile. So it offers a 1 per cent bribe to its depositors.
Let us be very clear about the reality and let us not be afflicted by the Filargyría virus. Let us take precautions. Once the bank runs out of money to pay back our deposits there is almost no way out. A long litigation may get us only peanuts. Particularly in these bad times it pays to play safe. Invest in the deposits of a bank which pays the least interest.

*The author is an investment consultant. Readers can send their comments and queries to
tenala@gmail.com